ROYALTY AGREEMENT

3 Months Ended

Apr. 30, 2016

ROYALTY AGREEMENT

ROYALTY AGREEMENT

Note 4.In April 2016, the Trust received its quarterly royalty payment from Northshore Mining Company (“Northshore”) of approximately $1,173,000. In accordance with the Trust’s revenue recognition policy, the cash royalty payment received by the Trust exceeded the royalty revenue earned, and the Trust has recorded a liability for the excess cash received in the amount of $195,731 as of April 30, 2016. It is possible this deferred royalty revenue may offset future royalty payments to be received from NMC for any shipments that occur in future quarters of this fiscal year. In addition, the Trust has recorded a liability for the anticipated negative pricing adjustments on unconsumed iron ore pellets at January 31, 2016 in the amount of $61,333 for the quarter ending April 30, 2016. It is possible this deferred revenue may offset anticipated pricing adjustments in future quarters.